Many might consider investing in companies engaged in the production or distribution of alcohol as ethically abhorrent. However, alcohol stocks, often termed sin stocks, will probably always be profitable, thanks to the inelastic demand for these products. The demand for alcohol tends to rise during periods of economic slowdown and recession, as people typically consume more alcohol because of frustration. During the first wave of COVID-19 in 2020, alcohol consumption in the U.S. hit a 20-year high.
As a threat of recession looms amid persistent inflation rates and tightening monetary policies, alcohol sales will most likely go up in the near term. In addition, the Japanese government recently announced a nationwide competition to develop a campaign to boost domestic alcohol consumption in a bid to increase tax revenues from alcohol sales. This, in turn, should boost global alcohol sales, while encouraging other hard-hit countries to follow suit. Thus, alcohol stocks could deliver a substantial return on investment (ROI) soon.
Top Alcohol Stocks To Buy Now
Diageo plc DEO
DEO is perhaps one of the best alcohol companies of all time, with prominent brands such as Johnnie Walker, Smirnoff and Don Julio in its pipeline. It is the largest producer of Scotch whiskey in the world. Up until 2017, the company was the world’s largest distiller. It posted a total sales volume of approximately 263 million equivalent units and more than 15 billion pounds in revenue in 2022.
Constellation Brands Inc. STZ
STZ is one of the largest alcohol companies in the U.S. This Fortune 500 company is one of the largest international producers of beer, wine and spirits. In addition, it is one of the fastest-growing large consumer packaged goods (CPG) producers in the U.S.
The company’s revenues increased 16.61% year-over-year to $2.36 billion in the last quarter. Its net income amounted to $399.3 million, compared to an $897.3 million loss reported in the prior-year quarter. This trend is expected to continue in the upcoming months, given the industry tailwinds.
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